Opinion
G053201
11-09-2017
1901 FIRST STREET OWNER, LLC, Plaintiff and Appellant, v. TUSTIN UNIFIED SCHOOL DISTRICT, Defendant and Respondent.
Jackson Tidus, Michael L. Tidus, Gregory P. Regier, and Nedda Mahrou for Plaintiff and Appellant. Bowie, Arneson, Wiles & Giannone, Wendy H. Wiles and Jeffrey W. Frey for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2015-00803234) OPINION Appeal from an order of the Superior Court of Orange County, Peter J. Wilson, Judge. Affirmed. Jackson Tidus, Michael L. Tidus, Gregory P. Regier, and Nedda Mahrou for Plaintiff and Appellant. Bowie, Arneson, Wiles & Giannone, Wendy H. Wiles and Jeffrey W. Frey for Defendant and Respondent.
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Plaintiff 1901 First Street Owner, LLC (1901 First Street) appeals from an order granting defendant Tustin Unified School District's (the District's) anti-SLAPP motion (Code Civ. Proc., § 425.16; Anti-SLAPP statute) as to plaintiff's causes of action for intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, and interference with contractual relations (collectively, the tortious interference claims). The underlying dispute arose after the City of Santa Ana (the City) had calculated the square footage of a property development for purposes of assessing a school impact fee. The District disputed the City's methodology and filed an administrative appeal. Before that appeal was resolved, the City revised its calculation in the District's favor, prompting 1901 First Street to file an administrative appeal. 1901 First Street prevailed in its administrative appeal and subsequently filed the present lawsuit alleging the District improperly "was urging and pressuring the City to change its standard practice by creating a 'new practice' that would base the assessable square footage calculations for school fee determinations upon a much more inclusive methodology based on the perimeter of the residential building." We conclude the court correctly determined the tortious interference claims were based on petitioning activity, and that 1901 First Street did not demonstrate a likelihood of prevailing on the merits, and thus affirm the order.
FACTS
The following facts are derived from the verified complaint and the evidence submitted in connection with the anti-SLAPP motion.
In 2013, 1901 First Street received approvals for a 264 unit multi-family apartment development. In the fall of 2014, 1901 First Street approached the City and the District in order to obtain the assessable square footage calculation for a determination of the school impact fee. Per Government Code section 65995, subdivision (b)(1), "'Assessable space,' for this purpose, means all of the square footage within the perimeter of a residential structure, not including any carport, covered or uncovered walkway, garage, overhang, patio, enclosed patio, detached accessory structure, or similar area. The amount of the square footage within the perimeter of a residential structure shall be calculated by the building department of the city or county issuing the building permit, in accordance with the standard practice of that city or county in calculating structural perimeters." (Italics added.) The City's standard practice for assessing space was to calculate the net rentable space, which includes the square footage of the dwelling areas, but excludes common areas such as hallways, walkways, accessory areas, garages, carports, leasing offices, and patios. Based on that methodology, the City calculated the assessed space as follows: residential buildings, 272,943 square feet; commercial retail, 2,424 square feet; leasing office, 2,100 square feet; clubhouse, 4,541 square feet. 1901 First Street alleges it received an e-mail confirmation from someone at the District that these calculations were correct, and that the District's chief financial officer was copied on the e-mail, though that e-mail was not attached to the verified complaint, nor was it produced in the course of the anti-SLAPP motion.
According to the declaration of Anthony Soria, the chief financial officer of the District, he received a worksheet showing the assessed square footage in September 2014. Soria had previously participated in an administrative appeal over the manner in which the City of Tustin had calculated the square footage of an apartment project. That appeal was resolved in favor of the District. Concerned about a similar situation developing, Soria tasked the District's financial consultant with verifying the square footage calculations. The consultant reported that, by the District's methodology, the assessed square footage was inaccurate. In October 2014, the City wrote a letter to Soria confirming the discrepancy, and asserting that the City's "practice is to use net rentable square footage for residential projects."
One week later, Soria wrote the City seeking clarification regarding the City's methodology. Soria wrote, "While the specifics of the methodology used by the City to calculate its square footage figures remain unclear, the Project Letter does shed some light that the City utilized 'net rentable square footage' to calculate the Project's square footage. However, the City's calculated 'net rentable square footage' does not include 'all of the square footage within the perimeter of a residential structure,' as required by Government Code Section 65995[, subdivision] (b)(1)."
In November 2014 the City responded: "The City calculated the assessable space for the Project utilizing the standard practice used by the City to calculate such square footage. Essentially, the City interprets Government Code section 65995[, subdivision] (b)(1) to calculate the assessable space as including the square footage of each residential unit, exempting all other areas. This same methodology is used for the school fee assessable space calculations for all such projects within the City, no matter which school district is implicated."
Soria declared in support of the anti-SLAPP motion: "As soon as I received the correspondence from the City Attorney, I reviewed the matter with the District's legal counsel . . . . Thereafter, I notified the District's legal counsel to prepare an appeal . . . challenging the City's determination of square footage for the Plaintiff's Project." In December 2014, a law firm representing the District wrote a letter to the clerk of the council of the City entitled, "Notice of Appeal regarding adverse determination by an Assistant City Attorney & Planning and Building Agency involving Tustin USD School Fees for 1901 E. First Street, Santa Ana." This appeal was submitted pursuant to chapter 3 of the Santa Ana Municipal Code, entitled "Uniform Hearing and Appeal Procedure."
In February 2015, the City did an about-face and revised its calculation of assessable space. In a letter to Lyon Communities (the developer), the City essentially sided with the District, concluding that Government Code section 65995 required the City to calculate the "'building area,'" i.e., "all of the square footage within the perimeter of a residential structure." The City's revised square footage calculations were: residential buildings, 342,945 square feet; retail and amenity spaces, 6,174 square feet; recreation deck building (clubhouse), 4,541 square feet. This added approximately 70,000 square feet to the prior calculation, resulting in an additional $238,549.86 in fees.
1901 First Street paid the additional fees under protest and appealed the determination revising the square footage pursuant to the City Municipal Code. The hearing officer found in favor of 1901 First Street, concluding "'the school fee in this case should be based upon the City's Initial Determination of the school fee, namely that the school fee should be based upon the square footage of each residential unit rather tha[n] the City's Subsequent Determination, namely the perimeter of the residential building.'"
Approximately two months later, having not received a refund from the District, 1901 First Street filed a verified petition for writ of mandate and complaint, alleging causes of action for (1) declaratory relief, (2) violation of Mitigation Fee Act, (3) intentional interference with prospective economic advantage, (4) negligent interference with prospective economic advantage, and (5) interference with contractual relations. The District filed an answer and a cross-complaint.
Approximately one month later, the District filed the anti-SLAPP motion at issue in this appeal. The motion targeted solely the tortious interference claims. The court granted the motion. Relying on the verified complaint and the District's administrative appeal, the court concluded that the allegedly tortious conduct was the District's challenge to the methodology used by the City, and that this constituted petitioning activity, satisfying the first prong of the anti-SLAPP analysis. As to whether 1901 First Street had demonstrated a likelihood of success on the merits, the court concluded the pleading was defective due to a lack of specificity and a failure to plead a statutory cause of action against the District. The court further found that no wrongful conduct had been alleged, nor was there evidence of any contract interfered with. Finally, the court found the litigation privilege presented an insurmountable defense to plaintiff's tortious interference claims. 1901 First Street timely appealed.
DISCUSSION
"In evaluating an anti-SLAPP motion, the court conducts a potentially two-step inquiry. [Citation.] First, the court must decide whether the defendant has made a threshold showing that the plaintiff's claim arises from protected activity. [Citation.] To meet its burden under the first prong of the anti-SLAPP test, the defendant must demonstrate that its act underlying the plaintiff's claim fits one of the categories spelled out in subdivision (e) of the anti-SLAPP statute." (Bonni v. St. Joseph Health System (2017) 13 Cal.App.5th 851, 859.) "Second — if the defendant meets its burden of showing all or part of its activity was protected — then the court proceeds to the next step of the inquiry. At this stage — applying the second prong of the anti-SLAPP test — the court asks 'whether the plaintiff has demonstrated a probability of prevailing on the claim.' [Citation.] [¶] An appellate court reviews a trial court's ruling on an anti-SLAPP motion de novo, applying the legal principles and two-prong test discussed above." (Id. at pp. 859-860.)
Subdivision (e) of the anti-SLAPP statute provides: "As used in this section, 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest."
Before addressing whether the tortious interference claims are based on petitioning activity, we must first determine precisely what activity gives rise to those claims. Indeed, much of the parties' dispute centers on this issue. 1901 First Street contends the District's actions concerned the calculation of square feet based on an established formula, an activity arguably excluded from the anti-SLAPP statute as a ministerial act. (See, e.g., City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 217 ["The [State Board of Equalization's] transmission of local sales tax revenues based on a retailer's tax returns is a nondiscretionary, ministerial act that involves no deliberation or discretionary decisionmaking" and thus "does not involve either a 'proceeding' or 'an issue under consideration or review' by an official body within the meaning of clauses (1) and (2) of section 425.16, subdivision (e)"]; Blackburn v. Brady (2004) 116 Cal.App.4th 670, 677 ["The ministerial event of a sheriff's sale or auction simply does not concern an issue under review or determine some disputed matter as contemplated under the anti-SLAPP law"].) The District contends it challenged the City's methodology of calculating square footage, which involved interpreting Government Code section 65995 — a discretionary activity well beyond a mere ministerial act.
We agree with the District. 1901 First Street's complaint alleges, "After 1901 First Street closed its loan, it learned that the District was urging and pressuring the City to change its standard practice by creating a 'new practice' that would base the assessable square footage calculations for school fee determinations upon a much more inclusive methodology based on the perimeter of the residential building." This is the crux of the allegedly wrongful conduct, and it plainly is based on urging a different methodology, not merely arithmetic. The entire record supports this conclusion. The District's first letter to the City, for example, sought clarification regarding "the City's methodology for calculating residential square footage." And the District's administrative appeal was entirely concerned with whether the practice of calculating "'net rentable square footage'" is consistent with the requirements of Government Code section 65995. The interpretation of a statute, as we well know, is no mere ministerial act. It requires the exercise of reason and judgment in light of not only text, but context.
Turning now to the caselaw interpreting subdivisions (e)(1) and (e)(2) of the anti-SLAPP statute, we conclude the District's allegedly wrongful conduct was petitioning activity. It satisfies this requirement in two respects.
First, it was an attempt to spur a policy change with regard to an issue under review by an administrative body.
In DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, a plaintiff class alleged the manufacturer of Coumadin engaged in various lobbying activities seeking to influence the decisions of regulatory and legislative bodies with false claims about a generic version of the drug. (Id. at pp. 564-565.) The court concluded these activities fell within subdivision (e)(1) of the anti-SLAPP statute. (Dupont, at p. 566.) Here, too, the District's communications with the City amounted to attempts to persuade the City to change its policy, which is indistinguishable from lobbying activity.
In ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, the plaintiffs alleged the defendants had sent the Securities and Exchange Commission a letter making false accusations with the intent of inciting an investigation. (Id. at p. 1000.) The court had "little difficulty" concluding such a communication was a statement before an official proceeding. The court relied on caselaw interpreting the litigation privilege to the effect that "'"communication to an official administrative agency . . . designed to prompt action by that agency"' is '"as much a part of the 'official proceeding' as a communication made after the proceedings had commenced."'" (Id. at p. 1009; see Code Civ. Proc., 425.16, subd. (e)(1).)
Similarly, in Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777 (Dove Audio) the defendant had solicited the endorsement of various celebrities in asking the Attorney General to open an investigation into whether Dove Audio, Inc., had failed to make certain royalty payments to charities. Dove Audio, Inc., sued for defamation. (Id. at p. 780.) The court held the communications were petitioning activity: "The communication was made in connection with an official proceeding authorized by law, a proposed complaint to the Attorney General seeking an investigation. 'The constitutional right to petition . . . includes the basic act of filing litigation or otherwise seeking administrative action.' [Citation.] Just as communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege of Civil Code section 47, subdivision (b) [Citation], we hold that such statements are equally entitled to the benefits of the anti-SLAPP statute. (Id. at p. 784.)
Here, the District's actions were likewise a direct attempt to influence the City to change its policy regarding the calculation of square footage in an attempt to alter the outcome of an issue under review by the City. This is plainly petitioning activity.
Second, the communications were prelitigation communications. As the Dove Audio court recognized, communications in anticipation of an administrative action are protected activity. (See Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115; see also Dove Audio, supra, 47 Cal.App.4th at p. 784.) Here, the District's chief financial officer attested to the fact that he had been involved in a prior administrative appeal regarding the calculation of square footage, and his investigation and communication with the City was out of concern that similar action may be required here. Indeed, less than three weeks after receiving clarification from the City regarding its methodology for calculating square footage, the District retained counsel and filed an administrative action. 1901 First Street presented no admissible evidence to rebut the District's evidence.
Having concluded 1901 First Street's tortious interference claims are based on petitioning activity, we turn now to the second prong of the anti-SLAPP analysis: whether 1901 First Street demonstrated a likelihood of prevailing. This requires the court "'to determine only if the plaintiff has stated and substantiated a legally sufficient claim.'" (Briggs v. Eden Council for Hope & Opportunity, supra, 19 Cal.4th at p. 1123.) "Put another way, the plaintiff 'must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.'" (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)
We conclude 1901 First Street did not show a probability of prevailing. Although the trial court identified a number of deficiencies, we confine our analysis to the litigation privilege, which presents an absolute defense to all three tortious interference claims.
"The litigation privilege applies 'to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.' [Citation.] '"The privilege 'is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards.' [Citation.]" [Citation.] The litigation privilege is interpreted broadly in order to further its principal purpose of affording litigants and witnesses the utmost freedom of access to the courts without fear of harassment in derivative tort actions." (Malin v. Singer (2013) 217 Cal.App.4th 1283, 1300.) "If all the elements of the privilege are satisfied, the privilege is absolute, a complete defense regardless of malice." (Laffer v. Levinson, Miller, Jacobs & Phillips (1995) 34 Cal.App.4th 117, 122.)
Our analysis of the second prong of the anti-SLAPP statute closely follows our analysis of the first prong. "There is, of course, a relationship between the litigation privilege and the anti-SLAPP statute. Past decisions of [the California Supreme Court] and the Court of Appeal have looked to the litigation privilege as an aid in construing the scope . . . of subdivision (e)(1) and (2) [of the anti-SLAPP statute] with respect to the first step of the two-step anti-SLAPP inquiry — that is, by examining the scope of the litigation privilege to determine whether a given communication falls within the ambit of subdivisions (e)(1) and (2)." (Flatley v. Mauro (2006) 39 Cal.4th 299, 322-223.)
As is the case under subsections (e)(1) and (e)(2) of the anti-SLAPP statute, communications in preparation of an official proceeding are subject to the litigation privilege. Thus, for example, in Dove Audio, supra, 47 Cal.App.4th, the court found the litigation privilege presented a substantive bar to the plaintiff's claims: "The communication at issue in this case was in preparation for the sending of a complaint to the Attorney General. As we have explained, communications preliminary to the institution of an official proceeding come within the privilege of Civil Code section 47, subdivision (b)." (Id. at p. 783; see also Rubin v. Green (1993) 4 Cal.4th 1187, 1194 ["communications with 'some relation' to an anticipated lawsuit are . . . within the privilege"].)
Here, as we have concluded above, the District's communications with the City were in anticipation of filing an administrative appeal. They were absolutely privileged, and no liability may attach. Accordingly, 1901 First Street failed to show a probability of prevailing on the tortious interference claims.
DISPOSITION
The order is affirmed. The District shall recover its costs incurred on appeal.
IKOLA, J. WE CONCUR: O'LEARY, P. J. THOMPSON, J.